Comments on: We can tackle inequality http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/ Richard Murphy on tax and corporate accountability Thu, 04 Dec 2008 20:08:30 +0000 http://wordpress.org/?v=2.6 By: Tax Research UK / Osborne on Inheritance Tax http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-197125 Tax Research UK / Osborne on Inheritance Tax Mon, 01 Oct 2007 15:53:43 +0000 http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-197125 [...] George Osborne proposes to raise the Inheritance Tax limit to £1 million so, as he puts it, the family home is not subject to this tax.The UK is a country suffering an increasing poverty gap. As example, the proportion of wealth held by Britain’s richest 10% has increased from 47% to 54% in the last ten years.The reason is simple. We do not tax people’s houses. As a result they have rocketed in price. Now the only young people who can get onto the housing ladder are those whose parents can help them.Osborne’s tax change would only exaggerate this trend - giving more help to those who already have homes whilst denying those on low income and with no wealth any chance of getting on the ladder at all.This path leads to economic apartheid between a country of ‘have homes’ and ‘have no homes’. Inheritance tax has been the sole bastion for redistribution of wealth that has helped prevent this outcome. Removing the tax from homes will simply guarantee some will never get one.Is that what George Osborne calls tax justice? If it is, I don’t. [...] [...] George Osborne proposes to raise the Inheritance Tax limit to £1 million so, as he puts it, the family home is not subject to this tax.The UK is a country suffering an increasing poverty gap. As example, the proportion of wealth held by Britain’s richest 10% has increased from 47% to 54% in the last ten years.The reason is simple. We do not tax people’s houses. As a result they have rocketed in price. Now the only young people who can get onto the housing ladder are those whose parents can help them.Osborne’s tax change would only exaggerate this trend - giving more help to those who already have homes whilst denying those on low income and with no wealth any chance of getting on the ladder at all.This path leads to economic apartheid between a country of ‘have homes’ and ‘have no homes’. Inheritance tax has been the sole bastion for redistribution of wealth that has helped prevent this outcome. Removing the tax from homes will simply guarantee some will never get one.Is that what George Osborne calls tax justice? If it is, I don’t. [...]

]]> By: Dane Clouston http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-151557 Dane Clouston Tue, 21 Aug 2007 14:00:11 +0000 http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-151557 Yes. I was distinguishing between a business created by its owners and given away and the same business - or shares in it - received by beneficiaries who have done nothing to create it. Similarly with all the other exempt assets, including: - all lifetime capital gifts given away more than seven years before the donor dies, with tapering to zero at three years - all interests in unincorporated businesses and unquoted companies - half the value of controlling shareholdings in quoted companies (such as the capitalised value of Philip Green's widely reported £300 million dividend) - half the value of land, plant or machinery used in qualifying businesses - all agricultural land 'in hand' of farmers - half the value of landoord's tenanted land (or all of it if you can kick the tenant out of it with in two years) - woodlands, until the timber is sold or cut - Lloyd's' Names funds at Lloyds - AIMs shares not quoted on other stock exchanges (treated, in a brilliant Inland Revenue one liner, "for this purpose as if they were not quoted") - half the value of capital gifts into discretionary trust, or the full amount if within the lifetime gifts exemption All in unlimited amounts! (See"The British Inheritance Tax" page of www.universal-inheritance.org) The distinction I was making was between the inequality of capital created by its owners, which is justified and necessary for incentives in a capitalist economy, and the inequality of lifetime receipts of gifted or bequeathed capital unearned by its recipients, which is nice if you can get it, but less justified and less necessary - or even counter-productive - for incentives. Which is why all donors should pay a 10 % tax on the luxury of giving and leaving - with intragenerational exemptions between partners, spouses and cohabiting siblings. And why there should be - with the same intragenerational exemptions - a negative (£10,000 at 25) and progressive (10% upwards) tax on cumulative unearned lifetime receipts, based only on the value of what is left and not on the type of asset - with transferable credits between the two taxes to avoid double taxation - in order to achieve the aim of spreading more widely the opportunities that come from the private ownership of unearned wealth in each new generation. Yes. I was distinguishing between a business created by its owners and given away and the same business - or shares in it - received by beneficiaries who have done nothing to create it. Similarly with all the other exempt assets, including:
- all lifetime capital gifts given away more than seven years before the donor dies, with tapering to zero at three years
- all interests in unincorporated businesses and unquoted companies
- half the value of controlling shareholdings in quoted companies (such as the capitalised value of Philip Green’s widely reported £300 million dividend)
- half the value of land, plant or machinery used in qualifying businesses
- all agricultural land ‘in hand’ of farmers
- half the value of landoord’s tenanted land (or all of it if you can kick the tenant out of it with in two years)
- woodlands, until the timber is sold or cut
- Lloyd’s’ Names funds at Lloyds
- AIMs shares not quoted on other stock exchanges (treated, in a brilliant Inland Revenue one liner, “for this purpose as if they were not quoted”)
- half the value of capital gifts into discretionary trust, or the full amount if within the lifetime gifts exemption

All in unlimited amounts! (See”The British Inheritance Tax” page of http://www.universal-inheritance.org)

The distinction I was making was between the inequality of capital created by its owners, which is justified and necessary for incentives in a capitalist economy, and the inequality of lifetime receipts of gifted or bequeathed capital unearned by its recipients, which is nice if you can get it, but less justified and less necessary - or even counter-productive - for incentives. Which is why all donors should pay a 10 % tax on the luxury of giving and leaving - with intragenerational exemptions between partners, spouses and cohabiting siblings. And why there should be - with the same intragenerational exemptions - a negative (£10,000 at 25) and progressive (10% upwards) tax on cumulative unearned lifetime receipts, based only on the value of what is left and not on the type of asset - with transferable credits between the two taxes to avoid double taxation - in order to achieve the aim of spreading more widely the opportunities that come from the private ownership of unearned wealth in each new generation.

]]> By: Tax Research LLP http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-151430 Tax Research LLP Tue, 21 Aug 2007 10:54:19 +0000 http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-151430 Dane In effect created wealth in the form of businesses ect is already exempt under Inheritance Tax Richard Dane

In effect created wealth in the form of businesses ect is already exempt under Inheritance Tax

Richard

]]> By: Dane Clouston http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-151428 Dane Clouston Tue, 21 Aug 2007 10:52:55 +0000 http://www.taxresearch.org.uk/Blog/2007/08/16/we-can-tackle-inequality/#comment-151428 If people are seriously concerned, as they should be, about increasing inequality, they should always distinguish clearly between income inequality and capital inequality. Then they should always distinguish clearly between inequality of capital created, earned, saved or made by its owners and inequality of lifetime receipts of gifted or bequeathed capital unearned by its recipients. Then they should always think about the reform of inheritance tax - in addition to any other measures proposed. How else - in order to increase opportunity in a capitalist democracy without serously affecting incentives to create wealth - can inequality of the ownership of assets be reduced? Dane Clouston OPPPORTUNITY - The Campaign for British Universal Inheritance If people are seriously concerned, as they should be, about increasing inequality, they should always distinguish clearly between income inequality and capital inequality. Then they should always distinguish clearly between inequality of capital created, earned, saved or made by its owners and inequality of lifetime receipts of gifted or bequeathed capital unearned by its recipients. Then they should always think about the reform of inheritance tax - in addition to any other measures proposed. How else - in order to increase opportunity in a capitalist democracy without serously affecting incentives to create wealth - can inequality of the ownership of assets be reduced?

Dane Clouston
OPPPORTUNITY - The Campaign for British Universal Inheritance

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